Wednesday, January 12, 2011

Executive Decisions part 3

Welcome back to my primer on business fundamentals. Let's get back to work.

As I said yesterday, the next steps in the process help you focus your attention in the areas you and your workshop participants decide are the most important. You want to identify your priorities and goals based on the 12-month visualization, so you know what to give your limited resources to and exactly who's doing what.

3. Priorities and Goals - your 12-month visualization cooked up a whole slate of work to do. Maybe you can get it all done and maybe you can't, but some of that work is going to be more important - more beneficial to your business - than others. It's also vital that you put some scope around your key objectives so you any anyone else affected by them know exactly what they mean. So a key step in building your strategic business plan for the next year is to distill your visualization's most critical components down into priorities and goals. Which probably makes you wonder, what's the difference? Read on and see!

Priorities - you can have more priorities than goals, and probably will. A priority is simply something you've identified that you consider more vital to your business success than other work you could be doing. When it comes down to a decision about what to work on, you should always pick the priority over the non-priority. It's pretty much that simple. Identify your top priorities at any given time period so you can balance your work-balance and stay on track.

Goals - these take a bit more work, and there will generally be fewer of them. Not everything you plan to do in the coming year will be suitable to turn into a goal, which is why you'll want to identify priorities as well. But for those tasks that you designate as goals, they should be the heaviest-hitters. They should be the tasks that, if accomplished, will have the biggest impact on your business. And it's vital that they're well-written in order to be truly effective. Each goal should be S.M.A.R.T. I've written about this before, but the Cliff's Notes version is to make each goal Specific, Measurable, Achievable, Realistic and Time-bound. You must know exactly what meeting the goal (or failing to meet it) will look like, and there has to be some tool for identifying success. The goal has to be something you can actually accomplish given the realities of your business, and, perhaps most importantly of all, you need to set a timeframe by which the goal must be met.

Break your year down into the priorities and goals you're going to work on each month, each quarter, and before you know it, there's a gameplan in front of you for driving business success!

Now, as mentioned yesterday, there are lots of other exercises you could use during a strategic planning workshop. Two tools that fit especially well in this part of the workshop would be a gap analysis and a risk mitigation matrix. Before we get on to creating our full strategic plan, let's talk about those.

Gap Analysis - this is a neat and useful exercise and fits really well with any of your Visualizations. The idea is to identify two key points in time for your business: the "current state" and the "desired future state" (which can be at any point in the future). It's important that the two states be broken down across similar categories, because the meat of the exercise is to define the distance between where you are now (the current state) and where you want to be (the desired future state) in as specific terms as possible. The outcome is to end up with a whole series of "this is specifically what we'd need to do to get where we want to be" items that you can then turn into priorities or goals or, if they're completely unrealistic, can decide to abandon completely.

That last is critical - unrealistic is unrealistic no matter how bad you may want it. Step up to the plate and make the executive decision, the tough call, right now. "We're not going to waste precious money or time on trying to achieve that, because it's not feasible given our current situation. Let's focus on those places where we're truly able to win, succeed, and grow." That's a much better speech to make to your team than one about how you blew all your company's ready cash chasing rainbows and are no longer a viable company.

Risk Mitigation Matrix - this is an excellent tool for all sorts of business scenarios, most notably projects. The idea is to try to identify every risk you and your team can think of - every obstacle that could get in the way of meeting your goals. List them. Next, draw columns beside the list and label them "likelihood" and "impact". Go down the list, and rate each item in those two categories. For each possible risk, how likely is it that the obstacle will actually occur? Rate it. For each possible risk, how big a deal would it be if it did occur? Rate it. I prefer to use a rating system of LOW/MEDIUM/HIGH. When you're finished, you'll have a matrix of risks, their chances of occurring, and their significance to the company if they do occur.

Next, select those risks that are HIGH in both categories. In other words, they are VERY likely to occur, and they will have a BIG impact if they do. Develop mitigation strategies for each - plans that you can either implement in advance to prevent the risk from occurring, or that you could implement after the fact to lessen the damage when it does. When you've developed plans for all of your heavy-hitters, go back down the list and do the same for the next two categories - those with HIGH in one column, and MEDIUM in the other. Ignore anything with LOW in both categories, and don't spend a lot of time on items with HIGH or MEDIUM likelihood but LOW impact. Sure, they're going to happen, but who really cares if they don't do any real harm to your business? When you're done, you should have a whole list of new priorities (the results of plans that need to be enacted NOW to prevent obstacles from getting in the way later) and an emergency preparedness plan to be implemented when and if certain risks occur that you weren't able to prevent. That's a pretty handy document to have, and you'll really appreciate it when all hell's breaking lose and you know you've got all the tools you need to deal with it and limit damage to your bottom line.

Tomorrow, the final wrap-up: creating a business plan for the next year. It'll be short and sweet, but oh so satisfying when you're watching your business grow as the result of your careful attention to these details.

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